Quick Lil’ Citi Trade Into Monday’s Earnings- Use Apr21 Weekly Options

by Dan April 14, 2011 10:50 am • Commentary

Citigroup (stock 4.44) reports earnings Monday morning pre-open.

-Implied move about 4% vs the avg move over the last 8 qtrs of about 5.25%.

-Based on JPM‘s report, I think safe to assume that you will not get better results from C than you got from JPM, which is down almost 3%  in a day since what wall street analysts thought was a very good showing.

-stock is down ~6% ytd under-performing JPM up ~7% and SPX which is up ~4.25% ytd.

–Wall Street analysts fairly mixed on the name with 16 buys, 9 holds and 3 sells, but average price target is about 5.50!

-Technically a break below 4.40 could have the stock down towards 4.00 if the commentary is less than stellar.

1yr Citi Chart showing huge support at 4.40 Bloomberg chart


C (stock ref 4.44) BUY the Apr21 weekly 4.5 Put for .13

Break-even on Next Fri Expiration:

Downside: stock 4.37 or lower u make money, that is down 1.5%.  stock btwn 4.37 and 4.50 can lose up to .13.  Worst Case stock above 4.5 and you lose the .13 premium you paid.


If JPM can’t cut it, then C won’t either, and if you are Bearish like me and looking for low premium, dollar cheap option ways to express this view into events this is one way to do it……That said, C is a very fine company in the midst of a phenomenal turnaround from the brink.  Full Disclosure: I bank with them and do Business with them, this is a very short term play into earnings.